RCF Acquisition Corp.
UNAUDITED CONDENSED BALANCE SHEETS
| |
March 31, | | |
December 31, | |
| |
2023 | | |
2022 | |
| |
| | |
| |
ASSETS | |
| | |
| |
Current assets | |
| | |
| |
Cash | |
$ | 897,575 | | |
$ | 41,276 | |
Prepaid expenses | |
| 147,653 | | |
| 268,368 | |
| |
| | | |
| | |
Total current assets | |
| 1,045,228 | | |
| 309,644 | |
| |
| | | |
| | |
Investment held in Trust Account | |
| 240,586,387 | | |
| 238,041,214 | |
| |
| | | |
| | |
Total Assets | |
$ | 241,631,615 | | |
$ | 238,350,858 | |
| |
| | | |
| | |
LIABILITIES, REDEEMABLE CLASS A ORDINARY SHARES AND SHAREHOLDERS’ DEFICIT | |
| | | |
| | |
| |
| | | |
| | |
LIABILITIES | |
| | | |
| | |
Current liabilities | |
| | | |
| | |
Accounts payable and accrued expenses | |
$ | 1,340,289 | | |
$ | 541,320 | |
Sponsor convertible note - related party | |
| 350,000 | | |
| 100,000 | |
| |
| | | |
| | |
Total current liabilities | |
| 1,690,289 | | |
| 641,320 | |
| |
| | | |
| | |
Non-current liabilities | |
| | | |
| | |
Deferred Underwriting Commission | |
| 8,050,000 | | |
| 8,050,000 | |
Warrant liability | |
| 2,320,000 | | |
| 1,624,000 | |
| |
| | | |
| | |
Total non-current liabilities | |
| 10,370,000 | | |
| 9,674,000 | |
| |
| | | |
| | |
Total Liabilities | |
| 12,060,289 | | |
| 10,315,320 | |
| |
| | | |
| | |
Commitments and Contingencies (Note 8) | |
| | | |
| | |
Redeemable Class A Ordinary shares | |
| | | |
| | |
Redeemable Class A ordinary shares, $0.0001 par value; 200,000,000 shares authorized, 23,000,000 shares issued and outstanding subject to possible redemption, at redemption value | |
| 234,600,000 | | |
| 234,600,000 | |
| |
| | | |
| | |
SHAREHOLDERS’ DEFICIT | |
| | | |
| | |
Preference shares, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding at March 31, 2023 and December 31, 2022 | |
| — | | |
| — | |
Class B ordinary shares; $0.0001 par value; 20,000,000 shares authorized; 5,750,000 issued and outstanding at March 31, 2023 and December 31, 2022 | |
| 575 | | |
| 575 | |
Additional paid-in capital | |
| — | | |
| — | |
Accumulated deficit | |
| (5,029,249 | ) | |
| (6,565,037 | ) |
| |
| | | |
| | |
Total Shareholders’ Deficit | |
| (5,028,674 | ) | |
| (6,564,462 | ) |
| |
| | | |
| | |
Total Liabilities, Redeemable Class A Ordinary Shares and Shareholders’ Deficit | |
$ | 241,631,615 | | |
$ | 238,350,858 | |
See accompanying notes to the unaudited condensed financial statements
RCF Acquisition Corp.
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
| |
For the Three Months Ended | |
| |
March 31,
2023 | | |
March 31,
2022 | |
EXPENSES | |
| | |
| |
General and administrative expenses | |
$ | 1,313,385 | | |
$ | 377,681 | |
| |
| | | |
| | |
Loss from operations | |
| (1,313,385 | ) | |
| (377,681 | ) |
| |
| | | |
| | |
OTHER INCOME (EXPENSE) | |
| | | |
| | |
Change in fair value of warrant liability | |
| (696,000 | ) | |
| 5,568,000 | |
Change in fair value of sponsor convertible note - related party | |
| 1,000,000 | | |
| — | |
Interest earned in Trust Account | |
| 2,545,173 | | |
| 19,503 | |
Total other income | |
| 2,849,173 | | |
| 5,587,503 | |
| |
| | | |
| | |
NET INCOME ALLOCABLE TO COMMON SHAREHOLDERS | |
$ | 1,535,788 | | |
$ | 5,209,822 | |
| |
| | | |
| | |
WEIGHTED AVERAGE SHARES OUTSTANDING OF REDEEMABLE CLASS A ORDINARY SHARES, BASIC AND DILUTED | |
| 23,000,000 | | |
| 23,000,000 | |
BASIC AND DILUTED NET INCOME PER SHARE, REDEEMABLE CLASS A ORDINARY SHARES | |
$ | 0.05 | | |
$ | 0.18 | |
WEIGHTED AVERAGE SHARES OUTSTANDING OF CLASS B ORDINARY SHARES, BASIC AND DILUTED | |
| 5,750,000 | | |
| 5,750,000 | |
BASIC AND DILUTED NET INCOME PER SHARE, CLASS B ORDINARY SHARES | |
$ | 0.05 | | |
$ | 0.18 | |
See accompanying notes to the unaudited condensed financial statements
RCF Acquisition Corp.
UNAUDITED CONDENSED STATEMENTS OF CHANGES IN REDEEMABLE CLASS A ORDINARY
SHARES AND SHAREHOLDERS’ DEFICIT
For the Three Months Ended March 31, 2023
| |
| | |
Shareholders’ Deficit | |
| |
Redeemable Class A Ordinary Shares | | |
Class B Ordinary
Shares | | |
Additional
paid-in | | |
Accumulated | | |
Total
shareholders’ | |
| |
Shares | | |
Amount | | |
Shares | | |
Amount | | |
capital | | |
deficit | | |
deficit | |
Balance, December 31, 2022 | |
| 23,000,000 | | |
$ | 234,600,000 | | |
| 5,750,000 | | |
$ | 575 | | |
$ | — | | |
$ | (6,565,037 | ) | |
$ | (6,564,462 | ) |
Net income | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 1,535,788 | | |
| 1,535,788 | |
Balance, March 31, 2023 | |
| 23,000,000 | | |
$ | 234,600,000 | | |
| 5,750,000 | | |
$ | 575 | | |
$ | — | | |
$ | (5,029,249 | ) | |
$ | (5,028,674 | ) |
For the Three Months Ended March 31, 2022
| |
| | |
Shareholders’ Deficit | |
| |
Redeemable Class A Ordinary Shares | | |
Class B Ordinary Shares | | |
Additional paid-in | | |
Accumulated | | |
Total shareholders’ | |
| |
Shares | | |
Amount | | |
Shares | | |
Amount | | |
capital | | |
deficit | | |
deficit | |
Balance, December 31, 2021 | |
| 23,000,000 | | |
$ | 234,600,000 | | |
| 5,750,000 | | |
$ | 575 | | |
$ | — | | |
$ | (20,408,536 | ) | |
$ | (20,407,961 | ) |
Net income | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 5,209,822 | | |
| 5,209,822 | |
Balance, March 31, 2022 | |
| 23,000,000 | | |
$ | 234,600,000 | | |
| 5,750,000 | | |
$ | 575 | | |
$ | — | | |
$ | (15,198,714 | ) | |
$ | (15,198,139 | ) |
See accompanying notes to the unaudited condensed
financial statements
RCF Acquisition Corp.
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
| |
For the Three Months Ended | |
| |
March 31,
2023 | | |
March 31,
2022 | |
CASH FLOWS FROM OPERATING ACTIVITIES | |
| | |
| |
Net income | |
$ | 1,535,788 | | |
$ | 5,209,822 | |
Adjustments to reconcile net income to net cash used in operating activities: | |
| | | |
| | |
Change in fair value of warrant liability | |
| 696,000 | | |
| (5,568,000 | ) |
Change in fair value of sponsor convertible note - related party | |
| (1,000,000 | ) | |
| — | |
Interest earned in Trust Account | |
| (2,545,173 | ) | |
| (19,503 | ) |
Changes in operating assets and liabilities: | |
| | | |
| | |
Prepaid expenses | |
| 120,715 | | |
| 186,118 | |
Accounts payable and accrued expenses | |
| 798,969 | | |
| 74,045 | |
Net cash flows used in operating activities | |
| (393,701 | ) | |
| (117,518 | ) |
| |
| | | |
| | |
CASH FLOWS FROM FINANCING ACTIVITIES | |
| | | |
| | |
Proceeds from sponsor convertible note - related party | |
$ | 1,250,000 | | |
| — | |
Net cash flows provided by financing activities | |
| 1,250,000 | | |
| — | |
| |
| | | |
| | |
NET CHANGE IN CASH | |
| 856,299 | | |
| (117,518 | ) |
CASH, BEGINNING OF PERIOD | |
| 41,276 | | |
| 700,293 | |
CASH, END OF PERIOD | |
$ | 897,575 | | |
$ | 582,775 | |
See accompanying notes to the unaudited condensed financial
statements
RCF Acquisition Corp.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Note 1 - Description of Organization and Business
Operations
RCF Acquisition Corp. (the “Company”)
was incorporated in Cayman Islands on June 9, 2021. The Company was formed for the purpose of effecting a merger, capital stock exchange,
asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (the “Business Combination”).
The Company’s sponsor is RCF VII Sponsor LLC, a Delaware limited liability company (the “Sponsor”). The Company has
selected December 31st as its fiscal year end.
All activity for the period from June 9, 2021
(inception) through March 31, 2023 relates to the Company’s formation, the initial public offering (“Public Offering”),
and activities related to pursuing merger opportunities. The Company will not generate operating revenues prior to the completion of a
Business Combination and will generate non-operating income in the form of interest income on Permitted Investments (as defined below)
from the proceeds derived from the Public Offering.
The registration statement for the Company’s
Public Offering was declared effective by the United States Securities and Exchange Commission (the “SEC”) on November 9,
2021. The Public Offering closed on November 15, 2021 (the “Closing Date”). Simultaneously with the closing of the Public
Offering, the Sponsor purchased an aggregate of 11,700,000 warrants to purchase Class A ordinary share (“Private Placement Warrants”)
for $1.00 each, or $11,700,000 in the aggregate, in a private placement on the Closing Date (the “Private Placement”).
The Company intends to finance a Business
Combination with proceeds from its $230,000,000 Public Offering (see Note 3) and $11,700,000 Private Placement (see Note 4). At the
Closing Date, proceeds of $241,700,000, net of underwriting discounts of $4,600,000 and $2,500,000 designated for operational use
were deposited in a trust account with Continental Stock Transfer and Trust Company acting as trustee (the “Trust
Account”) as described below. Transaction costs amounted to $13,267,977, consisting of $12,650,000 of underwriters fees of
which $8,050,000 was for Deferred Underwriting Commissions (see Note 8) and $617,977 of other offering costs.
Of the $241,700,000 total proceeds from the Public
Offering and Private Placement, $234,600,000 was deposited into the Trust Account on the Closing Date. The funds in the Trust Account
will be invested only in U.S. government treasury obligations with a maturity of 185 days or less or in money market funds meeting certain
conditions under Rule 2a-7 under the Investment Company Act which invest only in direct U.S. government treasury obligations (collectively
“Permitted Investments”).
Funds will remain in the Trust Account except
for the withdrawal of interest earned on the funds that may be released to the Company to pay taxes. The proceeds from the Public Offering
and Private Placement will not be released from the Trust Account until the earliest of (i) the completion of a Business Combination,
(ii) the redemption of the public shares if the Company has not completed a Business Combination within 18 months from the closing of
the Public Offering (unless extended by a vote of the Company’s shareholders at a general meeting), subject to applicable law, or
(iii) the redemption of the public shares properly submitted in connection with a shareholder vote to amend the amended and restated memorandum
and articles of association (A) that would modify the substance or timing of the Company obligation to allow redemption in connection
with a Business Combination or to redeem 100% of the Company’s public shares if the Company has not consummated a Business Combination
within 18 months from the closing of the Public Offering or (B) with respect to any other provisions relating to shareholders’ rights
or pre-initial business combination activity. Of the proceeds held outside the Trust Account, $296,235 was used to repay a loan from the
Company’s Sponsor and the remainder may be used to pay business, legal and accounting due diligence on prospective acquisitions,
listing fees and continuing general and administrative expenses.
The Company’s management has broad discretion
with respect to the specific application of the net proceeds of the Public Offering, although substantially all of the net proceeds of
the Public Offering are intended to be generally applied toward consummating a Business Combination with (or acquisition of) a target
business. The Company is focused on sponsoring the public listing of a company that combines attractive business fundamentals with, or
with the potential for strong environmental, social and governance principles and practices through a Business Combination. As used herein,
the target business must be with one or more target businesses that together have an aggregate fair market value equal to at least 80%
of the balance in the Trust Account (less any Deferred Underwriting Commissions and taxes payable on interest earned on the Trust Account)
at the time of the Company signing a definitive agreement.
After signing a definitive agreement for a Business
Combination, the Company will provide the public shareholders with the opportunity to redeem all or a portion of their Class A ordinary
shares upon the completion of a Business Combination either (i) in connection with a general meeting called to approve a Business Combination
or (ii) without a shareholder vote by means of a tender offer. Each public shareholder may elect to redeem their shares irrespective of
whether they vote for or against a Business Combination at a per share price, payable in cash, equal to the aggregate amount then on deposit
in the Trust Account as of two business days prior to the consummation of a Business Combination including interest earned on the funds
held in the Trust Account and not previously released to the Company to pay taxes, divided by the number of then outstanding public shares,
subject to the limitations described herein. The amount in the Trust Account was $10.20 per public share on the Closing Date. The per
share amount the Company will distribute to investors who properly redeem their shares will not be reduced by any Deferred Underwriting
Commissions payable to the underwriters of the Public Offering (the “Underwriters”). The decision as to whether the Company
will seek shareholder approval of a Business Combination or will allow shareholders to sell their shares in a tender offer will be made
by the Company, solely in its discretion, and will be based on a variety of factors such as the timing of the transaction and whether
the terms of the transaction would otherwise require the Company to seek shareholder approval under the law or stock exchange listing
requirements. If the Company seeks shareholder approval, it will complete its Business Combination only if a majority of the outstanding
of Class A ordinary shareholders vote in favor of a Business Combination. However, in no event will the Company redeem its public shares
in an amount that would cause its net tangible assets to be less than $5,000,001, after payment of the Deferred Underwriting Commission.
In such an instance, the Company would not proceed with the redemption of its public shares and the related Business Combination, and
instead may search for an alternate Business Combination.
The Company has 18 months from the Closing Date
to complete its Business Combination. If the Company does not complete a Business Combination within this period, it shall (i) cease all
operations except for the purposes of winding up; (ii) as promptly as reasonably possible but not more than ten business days thereafter,
redeem the public shares, at a per share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including
interest earned on the funds in the Trust Account and not previously released to the Company to pay its taxes (less up to $100,000 of
interest to pay dissolution expenses) divided by the number of then outstanding public shares, which redemption will completely extinguish
public shareholders’ rights as shareholders (including the right to receive further liquidation distributions, if any), subject
to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the remaining shareholders
and the board of directors, dissolve and liquidate, subject in each case to the Company’s obligations under Delaware law to provide
for claims of creditors and the requirements of other applicable law. The Initial Shareholders (as defined in Note 4 below) and the Company’s
officers and directors have entered into a letter agreement with the Company, pursuant to which they have waived their rights to liquidating
distributions from the Trust Account with respect to their Founder Shares (as defined in Note 4 below) if the Company fails to complete
a Business Combination within 18 months from the Closing Date. However, if the Initial Shareholders acquire public shares after the Closing
Date, they will be entitled to liquidating distributions from the Trust Account with respect to such public shares if the Company fails
to complete a Business Combination within the allotted 18-month time period.
On March 14, 2023, the Company signed a non-binding
letter of intent for a business combination with a company in the critical minerals sector (“Target”). However, no assurances
can be made that the Company and Target will successfully negotiate and enter into a definitive agreement regarding a business combination.
Any transaction would be subject to board and equity holder approval of both companies, regulatory approvals and other customary closing
conditions.
On April 3, 2023, the Company filed a definitive
proxy statement with respect to an extraordinary general meeting of shareholders, to be held on May 9, 2023, to ask shareholders to approve,
among other things, an amendment to the Company’s amended and restated memorandum and articles of association to extend (the “Extension”)
the date by which the Company must consummate a Business Combination from May 15, 2023 to May 15, 2024.
The Underwriters have agreed to waive their rights
to any Deferred Underwriting Commission held in the Trust Account in the event the Company does not complete a Business Combination and
those amounts will be included with the funds held in the Trust Account that will be available to fund the redemption of the Company’s
Public Shares.
If the Company fails to complete a Business
Combination, the redemption of the Company’s Public Shares will reduce the book value of the shares held by the Sponsor, who
will be the only remaining shareholder after such redemptions. If the Company holds a shareholder vote or there is a tender offer
for shares in connection with a Business Combination, a Public Shareholder will have the right to redeem its shares for an amount in
cash equal to its pro rata share of the aggregate amount then on deposit in the Trust Account as of two business days prior to the
consummation of a Business Combination, including interest earned on the funds held in the Trust Account and not previously released
to the Company to pay taxes. As a result, such shares are recorded at their redemption amount and classified as temporary equity on
the balance sheets, in accordance with Accounting Standards Codification (“ASC”) 480, “Distinguishing Liabilities
from Equity.”
Liquidity and Capital Resources
As of March 31, 2023, the Company had $897,575
in its operating bank accounts, $240,586,387 in securities held in the Trust Account to be used for a business combination or to repurchase
or redeem its ordinary shares in connection therewith and a working capital deficit of $645,061. As of March 31, 2023, $5,986,387 of the
amount on deposit in the Trust Account represented interest income, which is unavailable to fund operating expenses.
Until the consummation of a business combination,
the Company will be using the funds held outside of the Trust Account primarily to find and evaluate target businesses, perform business,
legal, and accounting due diligence on prospective target businesses, travel to and from the offices, plants or similar locations of prospective
target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses,
and structure, negotiate and complete a business combination.
The Company has incurred and expects to continue
to incur significant costs in pursuit of its acquisition plans. The Company anticipates that the cash held outside of the Trust Account
as of March 31, 2023, will not be sufficient to allow the Company to operate until May 15, 2023, the date at which the Company must complete
a Business Combination. If the Company is unable to complete a Business Combination by May 15, 2023, then the Company will cease all operations
except for the purpose of liquidating.
The Company issued the Sponsor Convertible Note
to the Sponsor (see Note 4), pursuant to which the Company may borrow up to $5,000,000 from the Sponsor for ongoing expenses reasonably
related to the business of the Company and the consummation of the Business Combination. Up to $1,500,000 of such loans may be convertible
into Private Placement Warrants of the post-business combination entity at a price of $1.00 per warrant at the option of the lender. Such
warrants would be identical to the Private Placement Warrants issued to the Sponsor. Prior to the completion of the initial business combination,
the Company does not expect to seek loans from parties other than its Sponsor or an affiliate of its Sponsor as the Company do not believe
third parties will be willing to loan such funds and provide a waiver against any and all rights to seek access to funds in the Company’s
Trust Account. As of March 31, 2023, the Company had $1,750,000 in outstanding borrowings under the Sponsor Convertible Note with a fair
value of $350,000. If the Company completes the initial business combination, the Company will repay any loaned amounts. In the event
that the Company’s initial business combination does not close, the Company may use a portion of the working capital held outside
the Trust Account to repay such loaned amounts but no proceeds from the Trust Account would be used to repay such loaned amounts.
Going Concern
In connection with the the Company's assessment of going concern considerations in accordance with Financial Accounting Standard Board’s
Accounting Standards Update (“ASU”) 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue
as a Going Concern,” while the Company expects to have sufficient access to additional sources of capital under the Sponsor Convertible
Note, there is no current obligation on the part of the Sponsor to provide additional capital and no assurances can be provided that such
additional capital will ultimately be available if necessary. Management also has determined that the Company will be unable to complete
a Business Combination by May 15, 2023, the date of which the Company must complete a Business Combination. If, prior to that date, the
required majority of shareholders do not vote in favor of extending the date to May 15, 2024, then the Company will cease all operations
except for the purpose of liquidating. Management has determined that substantial doubt exists about the Company’s ability to continue
as a going concern due to the need to obtain additional capital from Sponsor to address the Company’s liquidity condition, which
the Sponsor is not obligated to advance, and the date for mandatory liquidation and subsequent dissolution. No adjustments have been made
to the carrying amounts of assets or liabilities should the Company be required to liquidate after May 15, 2023.
Risks and Uncertainties
Management continues to evaluate the impact of
the COVID-19 pandemic and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company’s
financial position, results of its operations, and/or search for a target company, the specific impact is not readily determinable as
of the date of these unaudited condensed financial statements. The unaudited condensed financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
Note 2 - Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed financial
statements of the Company have been prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”)
for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include
all of the information and footnotes required by U.S. GAAP for audited financial statements. The unaudited condensed financial statements
reflect all adjustments (consisting only of normal recurring adjustments) which are, in the opinion of management, necessary for a fair
presentation of the results for the interim period presented. Operating results for the three months ended March 31, 2023 may not be indicative
of the results that may be expected for the year ending December 31, 2023. Amounts as of December 31, 2022 included in the condensed balance
sheet have been derived from the audited financial statements as of that date. The unaudited condensed financial statements, included
herein, should be read in conjunction with the audited financial statements and notes thereto, as well as Management’s Discussion
and Analysis of Financial Condition and Results of Operations, in the Company’s Form 10 K for the year ended December 31, 2022.
Use of Estimates
The preparation of the unaudited condensed financial
statements in conformity with U.S. GAAP requires the Company’s management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed financial
statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
The significant estimates reflected in the Company’s unaudited condensed financial statements include, but is not limited to, valuation
of the warrant liability and sponsor convertible note.
Cash and Cash Equivalents
The Company considers all short-term investments
with an original maturity of three months or less when purchased to be cash and cash equivalents. The Company did not have any cash equivalents
as of March 31, 2023.
Investment Held in Trust Account
The Company’s portfolio of investments held
in Trust Account is comprised solely of investments in money market funds that invest in U.S. government treasury obligations and generally
have a readily determinable fair value. Such securities and investments in money market funds are classified as trading securities and
presented on the unaudited condensed balance sheets at fair value at the end of each reporting period. Gains and losses resulting from
the change in fair value of these securities is included in the interest earned in Trust Account in the unaudited condensed statements
of operations. The estimated fair values of investments held in the Trust Account are determined using available market information.
Offering Costs Associated with the Public Offering
The Company complies with the requirements of
the ASC 340-10-S99-1 and SEC Staff Accounting Bulletin (“SAB”) Topic 5A - Expenses of Offering. Offering costs consist
of legal and other expenses incurred through the balance sheet date that are directly related to the Public Offering. Offering costs are
charged against the carrying value of Class A ordinary share or the statement of operations based on the relative value of the Class A
ordinary share and the Warrants, as described below, to the proceeds received from the Units sold upon the completion of the Public Offering.
Accordingly, as of the Closing Date, offering costs in the aggregate of $13,267,977 were recognized, $671,494 of which was allocated to
the Warrants, as described below, and were immediately expensed, and $12,596,483 was allocated to redeemable Class A ordinary share, reducing
the carrying amount of such shares.
Concentration of Credit Risk
Financial instruments that potentially subject
the Company to concentrations of credit risk consist of cash accounts in a financial institution, which, at times, may exceed the Federal
Depository Insurance Coverage limit of $250,000. At March 31, 2023, the Company has not experienced losses on these accounts and management
believes the Company is not exposed to significant risks on such accounts.
Financial Instruments
The fair value of the Company’s assets and
liabilities, which qualify as financial instruments under ASC 820, “Fair Value Measurements and Disclosures,” approximates
the carrying amounts represented in the balance sheets, primarily due to their short-term nature, except for the warrants and redeemable shares, which are carried at fair value and redemption value, respectively, as discussed below.
Fair Value Measurement
ASC 820 establishes a fair value hierarchy that
prioritizes and ranks the level of observability of inputs used to measure investments at fair value. The observability of inputs is impacted
by a number of factors, including the type of investment, characteristics specific to the investment, market conditions and other factors.
The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements)
and the lowest priority to unobservable inputs (Level 3 measurements).
Investments with readily available quoted prices
or for which fair value can be measured from quoted prices in active markets will typically have a higher degree of input observability
and a lesser degree of judgment applied in determining fair value.
The three levels of the fair value hierarchy under
ASC 820 are as follows:
| ● | Level 1 – Quoted prices (unadjusted) in active markets for identical investments at the
measurement date are used. |
| | |
| ● | Level 2 – Pricing inputs are other than quoted prices
included within Level 1 that are observable for the investment, either directly or indirectly. Level 2 pricing inputs include quoted
prices for similar investments in active markets, quoted prices for identical or similar investments in markets that are not active,
inputs other than quoted prices that are observable for the investment, and inputs that are derived principally from or corroborated
by observable market data by correlation or other means. |
| ● | Level 3- Pricing inputs are unobservable and include situations
where there is little, if any, market activity for the investment. The inputs used in determination of fair value require significant
judgment and estimation. |
In some cases, the inputs used to measure fair
value might fall within different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which
the investment is categorized in its entirety is determined based on the lowest level input that is significant to the investment. Assessing
the significance of a particular input to the valuation of an investment in its entirety requires judgment and considers factors specific
to the investment. The categorization of an investment within the hierarchy is based upon the pricing transparency of the investment and
does not necessarily correspond to the perceived risk of that investment. See Note 7 for additional information on assets and liabilities
measured at fair value.
Derivative Liabilities
The Company evaluated the Public Warrants and
Private Placement Warrants (collectively, “Warrant Securities”) in accordance with ASC 815-40, “Derivatives and Hedging
– Contracts in Entity’s Own Equity” and concluded that the Warrant Securities could not be accounted for as components
of equity. As the Warrant Securities meet the definition of a derivative in accordance with ASC 815, the Warrant Securities are recorded
as derivative liabilities on the balance sheets and measured at fair value at inception (the Closing Date) and remeasured at each reporting
date in accordance with ASC 820, “Fair Value Measurement,” with changes in fair value recognized in the statements of operations
in the period of change.
Redeemable Shares
All of the 23,000,000 Class A ordinary shares
sold as part of the Units in the Public Offering contain a redemption feature which allows for the redemption of such public shares in
connection with the Company’s liquidation if there is a shareholder vote or tender offer in connection with a Business Combination
and in connection with certain amendments to the Company’s amended and restated memorandum and articles of association. In accordance
with SEC staff’s guidance on redeemable equity instruments, which has been codified in ASC 480-10-S99, redemption provisions not
solely within the control of the Company require ordinary shares subject to redemption to be classified outside of permanent equity. Ordinary
liquidation events, which involve the redemption and liquidation of all of the entity’s equity instruments, are excluded from the
provisions of ASC 480.
The Company recognizes changes in redemption value
immediately as they occur and adjusts the carrying value of redeemable ordinary shares to equal the redemption value at the end of each
reporting period. Such changes are reflected in retained earnings, or in the absence of retained earnings, in additional paid-in capital.
As of December 31, 2021, the Company recorded an adjustment to present the redeemable Class A ordinary shares at redemption value of $28,926,483,
of which $24,425 was recorded against additional paid-in capital and $28,902,058 was recorded in accumulated deficit. No such adjustments
were recorded as of March 31, 2023.
Income Taxes
The Company complies with the accounting and reporting
requirements of ASC Topic 740, “Income Taxes,” which requires an asset and liability approach to financial accounting
and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement
and tax bases of assets and liabilities that will result in future taxable or deductible amounts, based on enacted tax laws and rates
applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary,
to reduce deferred tax assets to the amount expected to be realized.
FASB ASC 740 prescribes a recognition threshold
and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in
a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing
authorities. There were no unrecognized tax benefits as of March 31, 2023. The Company’s management determined that the Cayman Islands
is the Company’s only major tax jurisdiction. The Company is not currently aware of any issues under review that could result in
significant payments, accruals, or material deviation from its position. The Company is subject to tax examinations by major taxing authorities
since inception. There is currently no taxation imposed by the Government of the Cayman Islands. In accordance with Cayman income tax
regulations, income taxes are not levied on the Company. Consequently, income taxes are not reflected in the Company’s financial
statements. There were no unrecognized tax benefits as of March 31, 2023 and December 31, 2022.
There is currently no taxation imposed by the
Government of the Cayman Islands. The Company has no connection to any other taxable jurisdiction and is presently not subject to income
taxes or income tax filing requirements in the Cayman Islands or the United States. Consequently, income taxes are not reflected in the
Company’s financial statements.
Stock Compensation Expense
The Company accounts for stock-based compensation
expense in accordance with ASC 718, “Compensation - Stock Compensation” (“ASC 718”). Under ASC 718, stock-based
compensation associated with equity-classified awards is measured at fair value upon the grant date and recognized over the requisite
service period. To the extent a stock-based award is subject to a performance condition, the amount of expense recorded in a given period,
if any, reflects an assessment of the probability of achieving such performance condition, with compensation recognized once the event
is deemed probable to occur. The fair value of equity awards has been estimated using a market approach. Forfeitures are recognized as
incurred.
The Company’s Class B ordinary shares transferred
to incoming directors and management (see Note 4) were deemed to be within the scope of ASC 718, Stock Compensation, and are subject to
a performance condition, namely the occurrence of a Business Combination. Compensation expense related to the Class B ordinary shares
is recognized only when the performance condition is probable of occurrence, or more specifically when a Business Combination is consummated.
Therefore, no stock-based compensation expense has been recognized during the three months ended March 31, 2023 and 2022. The unrecognized
compensation expense related to the Class B ordinary shares at March 31, 2023 was $2,612,244 and will be recorded when the performance
condition occurs.
Recent Accounting Standards
Management does not believe that any recently
issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s financial
statements.
Income Per Ordinary Share
The Company’s unaudited condensed statements
of operations includes a presentation of income per share for redeemable ordinary shares in a manner similar to the two-class method in
calculating net income per ordinary share. Net income per ordinary share, basic and diluted, for Class A redeemable ordinary shares is
computed by dividing the pro rata net income between the Class A ordinary share and the Class B ordinary share by the weighted average
number of ordinary shares outstanding for the period, adjusted for the effects of deemed dividend under the assumption that they represent
dividends to the holders of Class A redeemable ordinary shares. Net income per ordinary share, basic and diluted, for Class B non-redeemable
ordinary shares is computed by dividing the pro rata net income between the Class A ordinary share and the Class B ordinary share by the
weighted average number of ordinary shares outstanding for the period.
The calculation of diluted income per ordinary
share does not consider the effect of the warrants and rights issued in connection with the Public Offering since the exercise of the
warrants and rights are contingent upon the occurrence of future events. For the three months ended March 31, 2023 and 2022, the Company
did not have any dilutive warrants, securities or other contracts that could potentially, be exercised or converted into ordinary shares.
As a result, diluted income per ordinary share is the same as basic income per ordinary share for the three months ended March 31, 2023
and 2022.
A reconciliation of net income per ordinary share
as adjusted for the portion of income that is attributable to ordinary shares subject to redemption is as follows:
| |
For the Three Months Ended | |
| |
March 31,
2023 | | |
March 31,
2022 | |
Redeemable Class A Ordinary Share | |
| | |
| |
Numerator: Net income allocable to Redeemable Class A Ordinary Share subject to possible redemption | |
| | |
| |
Net income allocable to ordinary shareholders | |
$ | 1,535,788 | | |
$ | 5,209,822 | |
Less: Net income allocable to Class B Ordinary Shares | |
| (307,158 | ) | |
| (1,041,964 | ) |
Net income allocable to Redeemable Class A Ordinary Shares subject to possible redemption | |
$ | 1,228,630 | | |
$ | 4,167,858 | |
| |
| | | |
| | |
Denominator: Weighted Average Shares Outstanding of Class A Ordinary Shares | |
| | | |
| | |
Basic and Diluted Weighted Average Shares Outstanding | |
| 23,000,000 | | |
| 23,000,000 | |
Basic and Diluted net income per share | |
$ | 0.05 | | |
$ | 0.18 | |
| |
| | | |
| | |
Class B Ordinary Share | |
| | | |
| | |
Numerator: Net income allocable to Class B Ordinary Share | |
| 307,158 | | |
| 1,041,964 | |
| |
| | | |
| | |
Denominator: Weighted Average Shares Outstanding of Class B Ordinary Shares | |
| | | |
| | |
Basic and Diluted Weighted Average Shares Outstanding | |
| 5,750,000 | | |
| 5,750,000 | |
Basic and Diluted net income per share | |
$ | 0.05 | | |
$ | 0.18 | |
Note 3 - Public Offering
In its Public Offering, the Company sold 23,000,000
Units at a price of $10.00 per Unit. Each unit consists of one share of Class A ordinary shares and one-half of a redeemable warrant (each,
a “Public Warrant”). Each Public Warrant entitles the holder to purchase one share of Class A ordinary shares at a price of
$11.50 per share, subject to adjustment (see Note 6).
The Company paid an underwriting discount of 2.00%
of the gross proceeds of the Public Offering, or $4,600,000, to the Underwriters at the Closing Date, with an additional fee (the “Deferred
Underwriting Commission”) of 3.50% of the gross proceeds of the Public Offering, or $8,050,000, payable upon the Company’s
completion of a Business Combination. The Deferred Underwriting Commission will become payable to the Underwriters from the amounts held
in the Trust Account solely in the event the Company completes a Business Combination. The Underwriters are not entitled to receive any
of the interest earned on Trust Account funds that would be used to pay the Deferred Underwriting Commission. The Deferred Underwriting
Commission has been recorded as a deferred liability on the balance sheets.
Note 4 - Related Party Transactions
Founder Shares
On June 9, 2021, the Sponsor purchased 5,750,000
shares (the “Founder Shares”) of the Company’s Class B ordinary shares, par value $0.0001 (“Class B ordinary shares”)
for an aggregate price of $25,000. The Sponsor subsequently transferred an aggregate of 402,500 Founder Shares to members of the Company’s
board of directors, management team, board of advisors and/or their estate planning vehicles for the same per-share consideration that
it originally paid for such shares, resulting in the Sponsor holding 5,347,500 Founder Shares.
As of the Closing Date, the Initial Shareholders
held 5,750,000 Founder Shares.
The Founder Shares are identical to the Class
A ordinary shares sold in the Public Offering except that:
| ● | the Founder Shares are subject to certain transfer restrictions, as described in more detail below; |
| ● | the Founder Shares are entitled to registration rights; |
| ● | only holders of Class B ordinary shares will have the right to vote in a vote to continue the Company
in a jurisdiction outside the Cayman Islands (which requires the approval of at least two-thirds of the votes of all ordinary shares); |
| ● | the Sponsor, officers and directors have entered into a letter agreement with the Company, pursuant to
which have agreed to (A) waive their redemption rights with respect to their founder shares and public shares in connection with the completion
of our initial business combination, (B) waive their redemption rights with respect to their founder shares and public shares in connection
with a shareholder vote to approve an amendment to our amended and restated memorandum and articles of association (A) that would modify
the substance or timing of our obligation to allow redemption in connection with our initial business combination or to redeem 100% of
our public shares if we have not consummated an initial business combination within 18 months from the closing of the Public Offering
or (B) with respect to any other provisions relating to shareholders’ rights or pre-initial business combination activity, (C) waive
their rights to liquidating distributions from the trust account with respect to their founder shares if we fail to complete our initial
business combination within 18 months from the closing of the Public Offering, although they will be entitled to liquidating distributions
from the trust account with respect to any public shares they hold if we fail to complete our initial business combination within such
time period and (D) vote any founder shares held by them and any public shares purchased during or after the Public Offering (including
in open market and privately-negotiated transactions) in favor of our initial business combination; and |
| ● | the founder shares are automatically convertible into Class A ordinary shares at the time of the consummation
of a Business Combination on a one-for-one basis, subject to adjustment as described in the Company’s amended and restated memorandum
and articles of association. |
The initial shareholders agree, subject to limited
exceptions, not to transfer, assign or sell any of its Founder Shares until the earlier to occur of: (A) one year after the completion
of the initial business combination or (B) subsequent to the initial business combination, (x) if the last sale price of the Class A ordinary
shares equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like)
for any 20 trading days within any 30-trading day period commencing at least 150 days after the initial business combination, or (y) the
date on which the Company completes a liquidation, merger, capital stock exchange or other similar transaction that results in all of
the Company’s shareholders having the right to exchange their shares of ordinary shares for cash, securities or other property.
Private Placement Warrants
On the Closing Date, the Sponsor purchased from
the Company 11,700,000 Private Placement Warrants at a price of $1.00 per Private Placement Warrant, or $11,700,000, in a Private Placement
that occurred in conjunction with the completion of the Public Offering. Each Private Placement Warrant entitles the holder to purchase
one share of Class A ordinary share at $11.50 per share, subject to adjustment. The Private Placement Warrants will not be redeemable
by the Company so long as they are held by the Sponsor or its permitted transferees. If the Private Placement Warrants are held by holders
other than the Sponsor or its permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable
by the holders on the same basis as the Public Warrants. The Sponsor, or its permitted transferees, will have the option to exercise the
Private Placement Warrants on a cashless basis. The Private Placement Warrants are not transferable, assignable or saleable until 30 days
after the completion of a Business Combination.
If the Company does not complete a Business Combination
within 18 months from the Closing Date, the proceeds from the sale of the Private Placement Warrants held in the Trust Account will be
used to fund the redemption of the Company’s Public Shares (subject to the requirements of applicable law) and the Private Placement
Warrants will expire worthless.
Indemnity
The Sponsor has agreed that it will be liable
to the Company if and to the extent any claims by a third party for services rendered or products sold to the Company, or a prospective
target business with which the Company discussed entering into a transaction agreement, reduces the amount of funds in the Trust Account
to below (i) $10.20 per public share or (ii) the actual amount per public share held in the Trust Account as of the date of the liquidation
of the Trust Account, if less than $10.20 per share due to reductions in the value of the trust assets, less taxes payable, provided that
such liability will not apply to any claims by a third party or prospective target business who executed a waiver of any and all rights
to the monies held in the trust account (whether or not such waiver is enforceable) nor will it apply to any claims under our indemnity
of the Underwriters of the Public Offering against certain liabilities, including liabilities under the Securities Act. Moreover, in the
event that an executed waiver is deemed to be unenforceable against a third party, the Sponsor will not be responsible to the extent of
any liability for such third-party claims. The Company will seek to reduce the possibility that the Sponsor will have to indemnify the
Trust Account due to claims of creditors by endeavoring to have all vendors, service providers, prospective target businesses or other
entities with which the Company does business, execute agreements with the Company waiving any right, title, interest or claim of any
kind in or to monies held in the Trust Account. The Company has not independently verified whether the Sponsor has sufficient funds to
satisfy its indemnity obligations and believes that the Sponsor’s only assets are securities of the Company and, therefore, the
Sponsor may not be able to satisfy those obligations. The Company has not asked the Sponsor to reserve for such eventuality as the Company
believes the likelihood of the Sponsor having to indemnify the Trust Account is limited because the Company will endeavor to have all
vendors and prospective target businesses as well as other entities execute agreements with the Company waiving any right, title, interest
or claim of any kind in or to monies held in the Trust Account.
Sponsor Convertible Note
On April 1, 2022, the Company issued an unsecured
convertible promissory note (the “Sponsor Convertible Note”) to the Sponsor, pursuant to which the Company may borrow up to
$5,000,000 from the Sponsor for ongoing expenses reasonably related to the business of the Company and the consummation of a Business
Combination. The Sponsor Convertible Note is non-interest bearing and all unpaid principal will be due and payable in full on the earlier
of (i) May 15, 2023 and (ii) the effective date of a merger, capital stock exchange, asset acquisition, stock purchase, reorganization
or similar business combination, involving the Company and one or more businesses (such earlier date, the “Maturity Date”).
If the Company completes the initial business combination, the Company will repay any loaned amounts. In the event the Company’s
initial business combination does not close, the Company may use a portion of the working capital held outside the Trust Account to repay
such loaned amounts but no proceeds from the Trust Account would be used to repay such loaned amounts.
Up to $1,500,000 of such loans may be convertible
into Private Placement Warrants of the post-business combination entity at a price of $1.00 per warrant at the option of the lender. The
Sponsor will have the option, at any time on or prior to the Maturity Date, to convert any amounts outstanding under the Sponsor Convertible
Note, into warrants to purchase the Company’s Class A ordinary shares at a conversion price of $1.00 per warrant, with each warrant
entitling the holder to purchase one Class A ordinary share at a price of $11.50 per share, subject to the same adjustments applicable
to the private placement warrants sold concurrently with the Company’s Public Offering. The Sponsor Convertible Note is accounted
for within the scope of ASC 480 and is measured at fair value upon the issuance and at each reporting period end with changes in fair
value recognized in the statements of operations. The fair value of this Note considers the likelihood of an initial business combination
closing and the potential value of such transaction against the likelihood of no initial business combination taking place resulting in
the redemption of the public shares and the fair value of the loan approximating its liquidation value. The fair value of the embedded
conversion feature upon the issuance of the Sponsor Convertible Note is de minimis.
On January 5, 2023, the Company borrowed $1,250,000
from the Sponsor Convertible Note. As of March 31, 2023, the Company had $1,750,000 in outstanding borrowings under the Sponsor Convertible
Note with a fair value of $350,000.
Service and Administrative Fees
The Company has agreed, commencing on November
10, 2021, to pay an affiliate of the Sponsor a total of $10,000 per month for office space, utilities, secretarial and administrative
support services provided to the Company’s management team. As of March 31, 2023, the Company had incurred $167,000 under this arrangement.
Upon completion of a Business Combination or the Company’s liquidation, the Company will cease paying these monthly fees.
Note 5 - Shareholders’ Deficit
Preference shares - The Company
is authorized to issue 1,000,000 shares of preference shares with such designations, voting and other rights and preferences as may be
determined from time to time by the Company’s board of directors. As of March 31, 2023, there were no shares of preference shares
issued or outstanding.
Class A Ordinary shares - The Company
is authorized to issue 200,000,000 shares of Class A ordinary shares with a par value of $0.0001 per share. As of March 31, 2023, there
were 23,000,000 shares of Class A ordinary shares issued and outstanding, all of which were subject to possible redemption and were classified
at their redemption value outside of shareholders’ deficit on the balance sheets.
The Company’s amended and restated memorandum
and articles of association provide that in no event will the Company redeem its Class A ordinary shares in an amount that would cause
the Company’s net tangible assets to be less than $5,000,001. In addition, the proposed initial business combination may impose
a minimum cash requirement for (i) cash consideration to be paid to the target or its owners, (ii) cash for working capital or other general
corporate purposes or (iii) the retention of cash to satisfy other conditions. In the event the aggregate cash consideration the Company
would be required to pay for all Class A ordinary shares that are validly submitted for redemption plus any amount required to satisfy
cash conditions pursuant to the terms of the proposed business combination exceed the aggregate amount of cash available to the Company,
the Company will not complete the business combination or redeem any shares and all Class A ordinary shares submitted for redemption will
be returned to the holders thereof.
Class B Ordinary shares - The Company
is authorized to issue 20,000,000 shares of Class B ordinary shares with a par value of $0.0001 per share. Holders of Class B ordinary
shares are entitled to one vote for each share. As of March 31, 2023, there were 5,750,000 shares of Class B ordinary share issued and
outstanding.
The Class B ordinary shares will automatically
convert into Class A ordinary shares concurrently with or immediately following the consummation of the initial business combination on
a one-for-one basis, subject to adjustment. In the case that additional Class A ordinary shares or equity-linked securities are issued
or deemed issued in connection with the initial business combination, the number of Class A ordinary shares issuable upon conversion of
all Class B ordinary shares will equal, in the aggregate, on an as-converted basis, 20% of the sum of (i) the total number of Class A
ordinary shares outstanding after such conversion (after giving effect to any redemptions of Class A ordinary shares by public shareholders),
plus (ii) the total number of Class A ordinary shares issued, or deemed issued or issuable upon conversion or exercise of any equity-linked
securities or rights issued or deemed issued, by the Company in connection with or in relation to the consummation of the initial business
combination, excluding any Class A ordinary shares or equity-linked securities exercisable for or convertible into Class A ordinary shares
issued, deemed issued or to be issued, to any seller in the initial business combination and any Private Placement Warrants issued to
the Company Sponsor, officers or directors upon conversion of Working Capital Loans; provided that such conversion of Class B ordinary
shares will never occur on a less than one-for-one basis.
Note 6 - Warrant Liability
As of March 31, 2023 and December 31, 2022, the
Company had 23,200,000 warrants issued in the Public Offering consisting of 11,500,000 Public Warrants and 11,700,000 Private Placement
Warrants, which are accounted for in accordance with the guidance contained in ASC 815-40. Such guidance provides that because the warrants
do not meet the criteria for equity treatment thereunder, each warrant must be recorded as a liability. Accordingly, the Company classified
each warrant as a liability at its fair value, with the change in the fair value recognized in the Company’s statements of operations.
The Public Warrants will become exercisable 30
days after the completion of a Business Combination. No warrants will be exercisable for cash unless the Company has an effective and
current registration statement covering the shares of ordinary shares issuable upon exercise of the warrants and a current prospectus
relating to such shares of ordinary shares. Notwithstanding the foregoing, if a registration statement covering the shares of ordinary
shares issuable upon exercise of the Public Warrants is not effective within a specified period following the consummation of a Business
Combination, warrant holders may, until such time as there is an effective registration statement and during any period when the Company
shall have failed to maintain an effective registration statement, exercise warrants on a cashless basis pursuant to the exemption provided
by Section 3(a)(9) of the Securities Act, provided that such exemption is available. If that exemption, or another exemption, is not available,
holders will not be able to exercise their warrants on a cashless basis. The Public Warrants will expire five years after the completion
of a Business Combination or earlier upon redemption or liquidation.
Redemption of warrants when the price per Class
A ordinary shares equals or exceeds $18.00
Once the warrants become exercisable, the Company
may redeem the outstanding warrants (except as described herein with respect to the Private Placement Warrants):
| ● | in whole and not in part; |
| ● | at a price of $0.01 per warrant; |
| ● | upon a minimum of 30 days’ prior written notice of redemption, and |
| ● | if, and only if, the last reported sale price (the “closing price”) of the Company’s
Class A ordinary shares equals or exceeds $18.00 per share (as adjusted for adjustments to the number of shares issuable upon exercise
or the exercise price of a warrant) for any 20 trading days within a 30-trading day period ending on the third trading day prior to the
date on which the Company send the notice of redemption to the warrant holders. |
Except as set forth below, none of the Private
Placement Warrants will be redeemable by the Company so long as they are held by the Company, Sponsor or its permitted transferees.
Redemption of warrants when the price per Class
A ordinary shares equals or exceeds $10.00
Once the warrants become exercisable, the Company
may redeem the outstanding warrants:
| ● | in whole and not in part; |
| ● | at $0.10 per warrant upon a minimum of 30 days’ prior written notice of redemption provided that
holders will be able to exercise their warrants on a cashless basis prior to redemption and receive that number of shares determined by
reference to the table set forth under “Description of Securities - Warrants - Public Shareholders’ Warrants” based
on the redemption date and the “fair market value” of the Company Class A ordinary shares except as otherwise described in
“Description of Securities - Warrants - Public Shareholders’ Warrants”; in the Public Offering prospectus; and |
| ● | if, and only if, the closing price of the Company’s Class A ordinary shares equals or exceeds $10.00
per share (as adjusted for adjustments to the number of shares issuable upon exercise or the exercise price of a warrant as described
under the heading “Description of Securities - Warrants - Public Shareholders’ Warrants - Anti-dilution Adjustments”
in the Public Offering prospectus) for any 20 trading days within the 30-trading day period ending three trading days before the Company
send the notice of redemption to the warrant holders. |
The “fair market value” of the Company’s
Class A ordinary shares for the above purpose shall mean the volume weighted average price of the Company’s Class A ordinary shares
during the 10 trading days immediately following the date on which the notice of redemption is sent to the holders of warrants. The Company
will provide the warrant holders with the final fair market value no later than one business day after the 10-trading day period described
above ends. In no event will the warrants be exercisable in connection with this redemption feature for more than 0.361 Class A ordinary
shares per warrant (subject to adjustment). Any redemption of the warrants for Class A ordinary shares will apply to both the Public Warrants
and the Private Placement Warrants.
No fractional Class A ordinary shares will be
issued upon redemption. If, upon redemption, a holder would be entitled to receive a fractional interest in a share, the Company will
round down to the nearest whole number of the number of Class A ordinary shares to be issued to the holder.
If the Company calls the Public Warrants for
redemption, Company management will have the option to require all holders that wish to exercise the Public Warrants to do so on a
“cashless basis,” as described in the warrant agreement. The Private Warrants will be identical to the Public Warrants
underlying the Units sold in the Public Offering, except that the Private Warrants and the shares of ordinary shares issuable upon
the exercise of the Private Warrants will not be transferable, assignable or saleable until after the completion of a Business
Combination, subject to certain limited exceptions. Additionally, the Private Warrants will be exercisable for cash or on a cashless
basis, at the holder’s option, and be non-redeemable so long as they are held by the initial purchasers or their permitted
transferees. If the Private Warrants are held by someone other than the initial purchasers or their permitted transferees, the
Private Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.
The exercise price and number of shares of ordinary
shares issuable on exercise of the warrants may be adjusted in certain circumstances including in the event of a share dividend, extraordinary
dividend or the Company’s recapitalization, reorganization, merger or consolidation. However, the warrants will not be adjusted
for issuances of shares of ordinary shares at a price below their respective exercise prices. Additionally, in no event will the Company
be required to net cash settle the warrants. If the Company is unable to complete a Business Combination within the Combination Period
and the Company liquidates the funds held in the Trust Account, holders of warrants will not receive any of such funds with respect to
their warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with the respect
to such warrants. Accordingly, the warrants may expire worthless.
In addition, if the Company issues additional
shares of ordinary shares or equity-linked securities for capital raising purposes in connection with the closing of a Business Combination
at an issue price or effective issue price of less than $9.20 per share of ordinary shares (with such issue price or effective issue price
to be determined in good faith by the Company’s board of directors, and in the case of any such issuance to the initial shareholders
or their affiliates, without taking into account any Founder Shares held by them prior to such issuance), (y) the aggregate gross proceeds
from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of a Business
Combination on the date of the consummation of a Business Combination (net of redemptions), and (z) the volume weighted average trading
price of the Company’s ordinary shares during the 20 trading day period starting on the trading day prior to the day on which the
Company consummates Business Combination (such price, the “Market Value”) is below $9.20 per share, the exercise price of
the warrants will be adjusted (to the nearest cent) to be equal to 115% of the greater of (i) the Market Value or (ii) the price at which
the Company issues the additional shares of ordinary shares or equity-linked securities.
Dividend Policy
The Company has not paid any cash dividends on
their ordinary shares to date and do not intend to pay cash dividends prior to the completion of our initial business combination. The
payment of cash dividends in the future will be dependent upon our revenues and earnings, if any, capital requirements and general financial
condition subsequent to completion of our initial business combination. The payment of any cash dividends subsequent to the Company’s
initial business combination will be within the discretion of the Company’s board of directors at such time.
Note 7 - Fair Value Measurements
As of March 31, 2023 and December 31, 2022, assets
held in the Trust Account were comprised of $240,586,387 and $238,041,214, respectively, in money market funds which are invested in U.S
Treasury Securities. The fair values of cash, prepaid assets, accounts payable and accrued expenses are estimated to approximate the carrying
values as of March 31, 2023, and December 31, 2022 due to the short maturities of such instruments.
The following table presents information
about the Company’s derivative assets and liabilities that are measured at fair value on a recurring basis as of March 31,
2023 and December 31, 2022 and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such
fair value.
| |
As of March 31, 2023 | |
| |
Level 1 | | |
Level 2 | | |
Level 3 | | |
Total | |
Assets: | |
| | |
| | |
| | |
| |
Investments held in Trust Account – Treasury Securities Money Market Fund | |
$ | 240,586,387 | | |
$ | — | | |
$ | — | | |
$ | 240,586,387 | |
Total | |
$ | 240,586,387 | | |
$ | — | | |
$ | — | | |
$ | 240,586,387 | |
| |
| | | |
| | | |
| | | |
| | |
Liabilities: | |
| | | |
| | | |
| | | |
| | |
Sponsor convertible note | |
$ | — | | |
$ | — | | |
$ | 350,000 | | |
$ | 350,000 | |
Public Warrants | |
| 1,150,000 | | |
| — | | |
| — | | |
| 1,150,000 | |
Private Placement Warrants | |
| — | | |
| 1,170,000 | | |
| — | | |
| 1,170,000 | |
| |
| | | |
| | | |
| | | |
| | |
Total | |
$ | 1,150,000 | | |
$ | 1,170,000 | | |
$ | 350,000 | | |
$ | 2,670,000 | |
| |
As of December 31, 2022 | |
| |
Level 1 | | |
Level 2 | | |
Level 3 | | |
Total | |
Assets: | |
| | |
| | |
| | |
| |
Investments held in Trust Account – Treasury Securities Money Market Fund | |
$ | 238,041,214 | | |
$ | — | | |
$ | — | | |
$ | 238,041,214 | |
Total | |
$ | 238,041,214 | | |
$ | — | | |
$ | — | | |
$ | 238,041,214 | |
| |
| | | |
| | | |
| | | |
| | |
Liabilities: | |
| | | |
| | | |
| | | |
| | |
Sponsor convertible note | |
$ | — | | |
$ | — | | |
$ | 100,000 | | |
$ | 100,000 | |
Public Warrants | |
| 805,000 | | |
| — | | |
| — | | |
| 805,000 | |
Private Placement Warrants | |
| — | | |
| 819,000 | | |
| — | | |
| 819,000 | |
| |
| | | |
| | | |
| | | |
| | |
Total | |
$ | 805,000 | | |
$ | 819,000 | | |
$ | 100,000 | | |
$ | 1,724,000 | |
Transfer to or from Levels 1,2, and 3 are recognized
at the end of the reporting period. The estimated fair value of the Public Warrants transferred from a Level 3 measurement to a Level
1 fair value measurement and the estimated fair value of the Private Placement Warrants transferred from a Level 3 measurement to a Level
2 measurement during the year ended December 31, 2022 when the Public Warrants were separately listed and traded in January 2022. There
were no transfers between levels of the hierarchy for the three months ended March 31, 2023.
The Company recognized $23,664,000 for the derivative
warrant liabilities upon their issuance on November 15, 2021. The Sponsor paid an aggregate of $11,700,000 for Private Placement Warrants
with an initial aggregate fair value of $11,934,000. The difference between the purchase price and the initial fair value on the Private
Placement closing date is recorded against accumulated deficit.
The fair value of the sponsor convertible note
for which Level 3 inputs were used at March 31, 2023, considers the likelihood of an initial business combination closing and the potential
value of such transaction against the likelihood of no initial business combination taking place resulting in the redemption of the public
shares and the fair value of the loan approximating its liquidation value.
The change in the fair value of the sponsor convertible
note, measured with Level 3 inputs, for the period from December 31, 2022 through March 31, 2023, is summarized as follows:
Sponsor convertible note at December 31, 2022 | |
$ | 100,000 | |
Proceeds from sponsor convertible note | |
| 1,250,000 | |
Change in fair value of sponsor convertible note(1) | |
| (1,000,000 | ) |
Sponsor convertible note at March 31, 2023 | |
$ | 350,000 | |
(1) | Changes in valuation assumptions are recognized in the change in fair value of sponsor convertible note – related party in the statements of operations. |
Note 8 - Commitments and Contingencies
Registration Rights
The holders of Founder Shares, Private Placement
Warrants and any warrants that may be issued upon conversion of Working Capital Loans, if any, will be entitled to registration rights
(in the case of the Founder Shares, only after conversion of such shares to shares of Class A ordinary shares) pursuant to a registration
rights agreement to be signed on the effective date of the Public Offering, requiring the Company to register such securities for resale
(in the case of the Founder Shares, only after conversion of such shares to shares of Class A ordinary shares). These holders will be
entitled to certain demand and “piggyback” registration rights. However, the registration rights agreement provides that the
Company will not permit any registration statement filed under the Securities Act to become effective until the termination of the applicable
lock-up period for the securities to be registered. The Company will bear the expenses incurred in connection with the filing of any such
registration statements.
Underwriting Agreement
The Underwriters purchased 3,000,000 Units to
cover over-allotments at the Public Offering price, less the underwriting commissions, bringing the total amount of Units purchased by
the Underwriters to 23,000,000 Units.
The Underwriters were paid a cash underwriting
discount of two percent (2%) of the gross proceeds of the Public Offering, or $4,600,000. Additionally, the Underwriters will be entitled
to a Deferred Underwriting Commission of 3.5% or $8,050,000 of the gross proceeds of the Public Offering held in the Trust Account upon
the completion of the Company’s initial business combination subject to the terms of the underwriting agreement.
Note 9 - Subsequent Events
Management evaluated subsequent events that occurred
after the balance sheet date through the date of issuance of these unaudited condensed financial statements, except on the item noted
below, no subsequent events which required adjustment or disclosure.
On April 3, 2023, the Company filed a definitive
proxy statement with respect to an extraordinary general meeting of shareholders, to be held on May 9, 2023, to ask shareholders to approve,
among other things, an amendment to the Company’s amended and restated memorandum and articles of association to extend the date
by which the Company must consummate a Business Combination from May 15, 2023 to May 15, 2024.